Otter Creek

The state of Montana Land Board has agreed to lease the rights to mine its 616 million tons of coal reserves known as Otter Creek in the Powder River Basin. Montana received the reserves from the Federal Government at the beginning of the decade. The State Board of Land Commissioners made the initial decision on December 21, 2009. Montana Governor Brian Schweitzer, a proponent of coal development, sits on the board along with other Montana officials.

Montana Land Board Approves Lease
On December 21, 2009, the Montana Land Board voted 4-1 in favor of leasing the mining rights to Otter Creek coal reserves. The board set the minimum bid at 25 cents per ton, which is two-and-a-half times the amount Arch Coal agreed to pay in November for the rights to develop 730 million tons of coal on adjacent, private lands. Coal companies have until February 8, 2010 to submit bids.

It was announced on February 9, 2010 that no mining companies had bid on the state parcels of Otter Creek. Arch Coal and others stated that the reason was the Land Board had placed too high of a price on the land, making it economically risky to invest in mining operations on the state land. On February 16, 2010 the Land Board voted 3-2 to lower the price of Otter Creek coal. The price was lowered from 25 cents a ton ($143 million) to 15 cents a ton ($86 million). In Wyoming, recent coal leases there went for as much as six times that amount, or 96 cents per ton. Land Board officials noted that most of the mines in Colorado were close to other existing mines, which had access to roads and railways. Otter Creek parcels are not close to existing transportation routes, which will require more investments over the long-run.

On March 17, 2010 Arch Coal put in the first bid for rights to mine Montana's Otter Creek coal at $86 million. This would include future royalties for the right to mine a 500 million tons of state-owned coal in southeastern Montana near the Wyoming border in the area known as the Powder River Basin. As of early 2010, Arch controlled 731 million tons of coal in Otter Creek. It is expected that by the end of March 2010, Montana's Land Board will decide on whether or not to accept the company's bid.

On July 13, 2010 Gov. Schweitzer along with officials of Arch Coal toured the site and answered questions with local media and the Northern Cheyenne tribe. Schweitzer said the coal giant hopes to have permits by 2013, and start mining by 2016.

In all Arch Coal controls 1.5 billion tons of coal on state and private land in Otter Creek. In June, 2010 when the company toured Otter Creek Arch Coal executives stated that they will aggressively pursue state permitting and hope to begin mining by the middle of the decade.

As of July 2010, two separate lawsuits filed by the Sierra Club and Montana Environmental Information Center were challenging the state lease on the grounds that the Montana Land Board did not properly address the 2.4 billion tons of carbon dioxide emitted by the mined coal prior to the lease.

Judge Upholds Environmentalist Court Challenge
In January 2010 District Judge Joe Hegel rejected an attempt by Arch Coal and the state of Montana to dismiss lawsuits brought in 2010 by four environmental groups. The rejection of the coal industry and state's challenge will allow the groups to move forward with their lawsuit, which claimed that the sale should have been reviewed under the Montana Environmental Policy Act.

Attorneys for Arch and the state had argued such a review must be done before mining, not at the leasing stage. However, Judge Hegel stated environmentalists had made a reasonable claim — that waiting until a mining application comes in could be too late to protect the constitutional right to a clean and healthful environment.

Citizen activism
On September 21, 2009 Chuck Kerr with Houston-based Great Northern Properties, which owns lands next to Montana coal properties, urged the state to begin leasing and mining the land. Both private and state coal holdings in Montana must be developed together.

The Northern Plains Resource Council countered that the coal reserves had not been analyzed properly for environmental impacts associated with the mining. Likewise, the Montana Environmental Information Center, said that the revenue projections for the land development are overly inflated and do not take into account dwindling demand for coal or concerns about carbon output.

February 2010: Montana Land Board Faces Opposition
On February 2, 2010 the Montana Land Board faced vocal opposition from the Northern Plains Resource Council who wants the Land Board to reconsider leasing Otter Creek for mining rights. Former Resource Council President Beth Kaeding claimed that mining in the area would hurt local farmers.

"We feel that strip mining down here, there's no transportation for this, there's going to be so many impacts if this project goes forward," Kaeding said, "and we'd just like those examined and considered before this goes forward."

In mid-February 2010, students spoke in Helena at the public Land Board meeting to oppose lowering the State's bid on Otter Creek coal. In Missoula, students from Hellgate High School protested in the streets in opposition to the Land Board's decision to sell off public lands to coal development, chanting "Hell no to dirty coal!".

On March 18, 2010 the Montana Land Board approved the leasing of Otter Creek coal to Arch Coal. Prior to the Land Board's 3-2 vote, five protesters were arrested at the Land Board's Capitol meeting room while they chanted "Hands off Otter Creek - you're not listening!"

Critics of the approved lease state that there are still many opportunities to halt the mining. They cite the fact that new railroads must be built and those hurdles will have to clear many federal and state environmental regulations. The proposed mines location, which is close to Yellowstone Park, has also caused objections from some in the environmental community. A gold mine was proposed in the past in the same area, but was abandoned due to similar concerns.

In March of 2010 Helena's Independent Record held a readers' poll to gauge support for the Otter Creek lease. The question was as follows: “Do you agree with the Land Board’s decision to approve leasing 570 million tons of state-owned coal for development into a mine in southeastern Montana’s Otter Creek Valley for 15 centers per ton? Seventy-five percent of the responses, 248 of them, were “no.” The other 25 percent of the responses to the unscientific poll, 84 votes, were “yes.”

March 2010: Protesters disrupt Montana State Land Board meeting
Five activists with Northern Rockies Rising Tide disrupted a Montana State Land Board meeting about leasing Otter Creek Coal Tracts. Linda McCulloch moved to accept a Ark Land Company's bid for the tracts following two hours of public comments. After McCulloch's motion, the activists sat down in front of the room and linked arms. They were arrested and removed from the room. The Land Board proceeded to approve the lease for just almost $86 million, or 15 cents per ton of coal.

March 2010: Opposition to Governor Schweitzer's Otter Creek Position
On March 29, 2010 Montana Governor Brian Schweitzer stated that he will tie the release of frozen state grants to local support for Otter Creek coal tract leases in southeastern Montana. Schweitzer stated that he did not want "any community to use coal money that didn't want to use coal money."

"This money is supposed to be used for schools and he's trying to issue it as a slush fund to spread around the state to curry favor for his administration and essentially buy or blackmail communities' support for coal," said Jim Jensen of the Montana Environmental Information Center (MEIC).

Wrote Schweitzer in a letter to community leaders, "The potential revenue from the sale of Otter Creek coal might allow for your project/projects to be funded. Please return a letter confirming that you ‘support the use of coal money for the completion of your project/projects."

Critics said that Schweitzer's tactics smacks of a Third World dictatorship.

Schweitzer reiterated this position across the state. "[If] coal is produced, the revenues generated are constitutionally required to go to support schools,"said MEIC. "That's true for the $86 million bonus bid as well. What the governor is doing with this strong-armed tactic, which is reminiscent of the typical Banana Republic dictator, is violating his constitutional duty to the (Coal) Trust. He has an absolute obligation and fidelity to the trust, and not to have what's known as divided interest."

May 2010: Earthjustice and Others Sue the State of Montana
On May 14, 2010 the Montana Environmental Information Center ("MEIC") and Sierra Club, represented by Earthjustice, took legal action to challenge the Otter Creek strip mine in southeastern Montana. The lawsuit filed in state court alleged that the state Land Board's decision to lease 572 million tons of coal in Otter Creek for mining, without first examining the potential environmental impact, "violated the state's constitutional and fiduciary obligation to prevent unreasonable environmental degradation."

On May 13, 2010 Northern Plains Resource Council and National Wildlife Federation also sued the state Land Board's decision to lease the Otter Creek coal tracts without any environmental analysis.

July 2010: Group Seeks to Stall Montana Coal Railroad
On July 27, 2010, the Northern Plains Resource Council asked the federal Surface Transportation Board to reconsider its approval of a proposed $550 million railroad that would open new areas of Montana's section of the Powder River Basin to coal mining. The group wants a new environmental impact study done on the railroad proposal, noting that many things have changed since the Board approved the original plan.

May 2011: Protests target banks in Portland, Oregon
On Friday, May 9th, 2011 two bank branches in downtown Portland, Oregon, one belonging to Bank of America and the other to Wells Fargo, were targeted by approximately 30 activists who showed up to protest the banks’ investments in coal projects. Both banks are major lenders to Arch Coal, the second biggest coal company in the United States. Arch Coal was targeted because, along with Ambre Energy, it is responsible for the proposed Millennium Bulk Logistics Longview Terminal near Longview, Washington. Arch Coal also owns the Otter Creek coal mine in Montana, which the company hopes to use as a source of coal to be exported.

Protesters assembled by Portland's Reed College entered the banks as mock coal export trains, which they believed will expose Northwest residents to coal dust, diesel fumes and noise pollution if the coal export facility near Longview becomes operational. A multi-car human ”coal train” entered the banks and marched around the bank's lobby, temporarily disrupting business inside. Climate activists chanted “Hey hey, B of A: Stop investing in coal today!” And later, “Hey hey, Wells Fargo: You say coal, we say no!”

Citizen groups

 * Citizens for Clean Energy
 * Montana Environmental Information Center
 * Northern Plains Resource Council
 * Climate Ground Zero
 * Northern Rockies Rising Tide

Related SourceWatch articles

 * Coal and jobs in the United States
 * Coal phase-out
 * Headquarters of U.S. coal mining companies
 * Global list of coal mining companies and agencies
 * Montana and coal
 * Powder River Basin
 * Proposed coal mines

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